Construction Update

Since the Developer had delayed the project beyond the time limit as per the Joint Development Agreement ; Landowner Mr.B.R.Shetty has gone ahead and revoked the General Power Of Attorney given to M/s Nitesh Estates Limited. Landowner has given PUBLIC NOTICE in the Newspaper – VIJAY KARNATAKA dated March 20th 2018 (Page 7) as below:-

NCPBA thanks all the members who have joined together to fight for their flats which are not completed as yet by Nitesh Estates Limited. As per the court order to publish the public notice , we have published the same notice in “Vijay Karnataka” as below –Our Submission of the consumer case was challenged on the grounds whether it qualifies to be entered under Class Action Law Suit under section 12(1) C of consumer protection act 1986 or not by Nitesh Estates Limited. The court has ordered in favor of the Nitesh Caesars Palace buyers and has also issued the order to issue a public notice in leading newspapers. We invite all the buyers in the Nitesh Caesars Palace project to be part of consumer case to ask for their rights and early completion of their flats.

If people who are left out of this 250 list , still wish to join the consumer case can contact us at ncpbassociation@gmail.com or to Mr.Vishwanath @ 9845008469 or to Mr.Rajesh – 9845274728.

NCPBA doesn’t wish to leave out any buyers stranded alone , fighting alone for their own flats with Nitesh Estates Limited.

If any questions or any difficulty , please feel free to call or mail us.
As per the court order , we would like to invite all other buyers from the project “NITESH CAESAR’S PALACE” to be part of the consumer case and ask for their rights.

All home buyers can join a existing complaint filed

Judgement of the case will be binding on all the buyers

Only one complaint to be filed against the Builder /Developer Under Section 12.1 C as a group of buyers

All other complainants can join as a group after the Public Notice is served

Judgement to be based on Agreement Value and not Market Value

The NCDRC have clarified its position on Section 12 (1) (c) of Consumer Protection Act 1986. NCDRC has allowed complaints by a group of buyers under Section 12 (1) (c).

If we have to go by layman’s interpretation, all builder related cases can by filed in NCDRC, thus skipping the lower forums.

There has been a lot of confusion and ambiguity in the interpretation of complaints filed under Section 12 (1) (c). Different benches of NCDRC had a different view on this section of the Act.

This led to the matter being referred to a three-member bench of NCDRC. These three question/issues arose in front of the commission: Whether complaint under Section 12 (1) (c) filed on behalf of or for the benefit of only some the numerous buyers are maintainable or it must be filed on behalf of all consumers having a common interest.

Where complaint under this section is maintainable where the value of goods, service, compensation in respect of none of the allottees exceeds rupees one crore.

Where complaint under this section is maintainable where the value of goods, service, compensation in respect to individual allottee exceeds rupees one crore.

Where complaint under this section is maintainable where the cost of the apartment, the area of the apartments is different and the apartments were booked on different dates.

Court’s observation

Here are the key observations in full bench judgement concerning the interpretation of Section 12 (1) (c) of the Consumer Protection Act. We have tried to explain court’s order in laymen’s terms.

If a complaint is against a builder under Section 12 (1) (c), i.e by an unregistered group of persons, it can be filed only on behalf of or for the benefit of all buyers who have the same interest and grievance against the builder. It cannot be filed seeking relief for the benefit of only some of the buyers.

A complaint under Section 12 (1) (c) is maintainable before the NCDRC where the aggregate value of the all the apartments combined and the total compensation claimed in respect of all the buyers exceeds Rs. 1 crore. The value of each individual apartment is wholly irrelevant in such a complaint.

So long as the grievance of the buyers is common and an identical relief is claimed for all of them, the cost, the size, area of the flat/plot and the date of booking/allotment/purchase would be wholly immaterial. The relief claimed will be the same if for example, in a case of delay in possession, refund, or possession or in the alternate refund, with or without compensation, is claimed for all the buyers. Different reliefs for one or more consumers on whose behalf or for whose benefit the complaint is filed cannot be claimed in such a complaint.

The jurisdiction of the NCDRC shall be decided on the agreed sale consideration ,i.e.value at the time of booking the apartment, not the market value of the apartment. e. A cooperative society or a group of cooperative societies, firms, an association shall not be entitled to file a complaint under Section 12 (1) (c) unless the cooperative society itself is the consumer.

The Act does not allow more than one complaints in a representative character. The decision in one complaint filed in a representative capacity will bind all the buyers of the project. Therefore once a complaint in a representative capacity is filed under Section 12 (1) (c), and requisite permission for filing the same is given by the consumer forum, the second complaint under Section 12 (1) (c) will not be maintainable for the same project for the same relief. A second complaint, if filed, having the same interest and seeking the same relief is liable to be dismissed with liberty to seek impleadment in the complaint already instituted.

Since a complaint in a representative capacity shall be binding on all the buyers, an individual complaint expressing the same grievance will not be maintainable and the only recourse available to such buyer is to seek impleadment in the complaint filed in the representative capacity. However, as far as individual complaints instituted prior to grant of requisite permission under Section 12 (1) (c) is concerned, such complainants cannot be compelled to withdraw their individual complaint.

The consumers who are already before the consumer forum when the requisite permission in terms of Section 12 (1) (c) is accorded, will be out of purview of the representative complaint. The order passed in the representative complaint will not be binding on them.

However, if such persons want to withdraw their pending complaints and join the complaint instituted in the representative capacity, there is no bar on their adopting such a course of action. h. Considering the binding effect of a decision rendered under Section 12 (1) (c) on all the consumers on whose behalf such a complaint is filed, even if they choose not to join as a party to the complaint, It is necessary to exercise due care and caution while considering such a complaint while granting the requisite permission under Section 12 (1) (c).

It would be necessary for the bench to either give individual notices or an adequate public notice of the institution of the complaints, to all the persons on whose behalf or for whose benefit the complaint is instituted. Such a notice should disclose the subject matter of the complaint including particulars of the project, class of persons on whose behalf or for whose benefit the complaint is filed, the common grievance is sought to be addressed, the alleged deficiency in the service and the reliefs claimed.

It will also be necessary to hear the opposite party before taking a final view on grant of necessary permission under Section 12 (1) (c).

Court’s observation on existing complaints Individual complaints filed prior to the grant of requisite permission under Section 12 (1) (c) have been validly instituted and they can not be compelled to withdraw their individual complaint and compelled to become a party of subsequent complaints filed in a representative capacity. If, however, such persons want to withdraw their individual complaints and join the representative suit, they shall be allowed.

Example of a similar order pass by the consumer court in Case of Nitesh Caesars Palace :-

The instant complaint has been filed by Shri Vishwanath Shankar and 203 other complainants as a class action alleging deficiency in service on the part of the opposite party in respect of the builder buyer agreement executed by the complainants and other consumers with respect to the development project ‘Nitesh Caesar Palace’ undertaken by the opposite party. Along with the complaint an application under Section 12 (1) (c) of the Consumer Protection Act, 1986 seeking permission to proceed with the complaint as a class action, has been filed. The application is opposed on the ground that even among 204 complainants there are different groups of complainants having different interest.

We have heard the parties and perused the record. On careful perusal of the complaint we find that in para-1 the complainants have specifically mentioned that they wish to proceed with the complaint as a class action on behalf of themselves and other similarly placed consumers having the same interest and even in the prayer clause the complainants have sought similarly relief for all other consumers who are not party to the complaint. Therefore, in our view the complaint fits within the parameters of Section 12 (1) (c) of the Act. Accordingly, we grant permission under Section 12 (1) (c) of the Act to the complainants to proceed with the complaint as class action. As this is a class action complaint, issue public notice under Order 1 Rule 8 CPC in Deccan Herald (English) and Vijaya (Karnataka).

Generally, most home buyers remain in a dilemma: to file a case against the developer or not? Most don’t want to get involved in a long drawn legal process. Some are even scared of going against a builder. “The larger and less wholesome truth is that the current legal dispensation is ill-equipped and under-regulated to offer complete consumer protection in matters related to real estate,” said Anuj Puri, chairman and country head, JLL India. But, “many examples of customers obtaining favourable decisions upon approaching consumer courts exist, and the power of these forums should not be underestimated,” he added.

So, if you are an aggrieved home buyer, you should not hesitate in taking legal help. “Once the due date for possession is over, the buyer should visit the site and take stock of the situation by trying to assess whether the period of delay will be negligible or considerable. If the buyer feels that delay will be considerable, it would be pointless to wait further, and she should immediately file a case,” said Jehangir Gai, a Mumbai-based consumer activist.

You can also approach the court for other issues as well. “When it comes to deviations from the original project plan, which can result in a shortfall of common amenities or drastic changes to the units themselves, the customer should take action as soon as these deviations come to light,” said Puri.

But do remember that there is a stipulated time frame within which a case has to be filed by home buyers. “The consumer court will not entertain a complaint after the limitation period of two years is over from the date of cause of action. Hence, the consumer has to be very alert and should immediately file a case in the consumer court. Don’t keep the matter pending,” said Arun Saxena, president, International Consumer Right Protection Council. However, “with regard to real estate, since there will be a continuous cause of action, this provision (2-year timeline) may not strictly apply,” said S. Saroja, director, consumer advisory and outreach, Citizen Consumer and Civic Action Group.

There are different avenues that you can take. “A homebuyer can approach the consumer court, civil or criminal court, or the Competition Commission of India (CCI), depending on the nature of complaint,” said Saroja.

Things to do

As in any legal matter, you should posses evidence to prove your stand or allegation. Get all papers and documents ready—advertisement brochure, booking receipts with payment details, any letter sent by the developer, signed agreement, all payment details, emails exchanged, photographs collected, and others. Avoid verbal communication.

“It is important that the consumer maintains written correspondence with the builder at regular intervals during the course of construction, highlighting issues then and there, as this will be a strong point in her favour when she approaches the Consumer Fora at a later stage,” said Saroja.

However, before going for legal action, you should have raised the issue with the developer. “Buyers should always send a legal notice before approaching any forum or court with their grievance. They should have taken objection with the builder against violations or illegal demands by sending a letter so that evidence can be created in their favour to be produced at the time of proceedings,” said Pathak.

So, if you are an aggrieved home buyer, contact others and form a group. Note down the issues and information available with each person. Approach the developer as a group. If no resolution is in sight, take legal advice from an expert.

Delay of six months to a year has become commonplace in residential real estate, and most buyers expect it. But a longer delay puts additional financial burden, and filing a suit against a developer is justified.

Gaurav Prakash, 35, is a senior solution architect working with Ericsson India Ltd, in Gurgaon. But a problem that he can’t find a solution to is his house. Towards the end of 2011, he along with his wife Sashi Pandey, a 35-year-old senior manager in a telecom company, bought an under-construction apartment of about 2,000 sq. ft in Dwarka Expressway, which falls roughly between Gurgaon and Dwarka (on the south-western periphery of New Delhi).The house cost them Rs.70 lakh, for which the couple took a home loan. They were told that they will get possession by around June 2014, but that didn’t happen. And like scores of other urban Indians, they too, are still waiting for the house two years later.

But apart from the house being not available, what bothers them, and others alike, is that they are not able to make use of the substantial tax benefits available on a home loan. And then there’s the rent they continue to pay. “We are paying Rs.52,000 as equated monthly instalment (EMI), andRs.28,000 as rent every month,” said Prakash. So, it’s a triple whammy. Here’s why.

The couple had taken a construction-linked home loan. For two years, construction progressed well and the developer asked for about 90% of the cost based on the stage of the project. But after that, construction almost stopped. As of now, the estimated date of possession is June 2016.

The two-year delay in completion has substantially increased the effective cost of purchasing the house. And most of these costs will not get added while determining the cost of acquisition at the time of calculating capital gains if and when the house is sold. But that comes much later, since the couple doesn’t have the house yet, as also many other home buyers.

Project delay not only restrains home buyers from shifting into their own houses, but also has a big impact on the cost of purchase. Here’s a look at how much that impact can be and how it happens. Read Ahead

Problem No.1: Paying both EMI and rent

Problem No.2: Loss of home loan tax benefits

Problem No.3: Loss due to income tax

Problem No.4: There are other costs also

Mint Money take

If you buy an under-construction property, and it gets stuck, there is limited scope of getting out. Not only do you have to pay both EMI and rent, if you want to sell the house, finding a buyer for a project running behind schedule can be difficult. Even if you do find a buyer, you may have to incur a heavy loss, as you may not be able to get the right price to recover the cost.

If you are an end-user, selling and buying a house in a completed project may not be a feasible option. You will have to sell your current house at a loss and the new completed house will come at a premium.

So, first try to look at the other options. “Look at the clauses in the agreement for penalties that one can pursue legally,” said Anil Rego, chief executive officer and founder, Right Horizons.

If for some reason you are unable to service the loan, “one can request the loan issuing bank to allow her to delay the loan payments. But in this case, the interest will get added to the principal and the total loan amount will increase. Moreover, not all banks will provide that facility,” said Rego.

If the delay is due to the developer, form a home buyers’ association and approach the developer jointly. “The best option is to talk to the developer and try to get the issue resolved as soon as possible,” said Rego. Try to convince the developer to enhance the compensation for the delay and complete the construction soon. If the developer does not pay heed to buyers’ demands, you can look for a legal recourse.

Last year, in June, the National Consumer Disputes Redressal Commission (NCDRC) asked real estate company Unitech Ltd. to pay buyers compensation at the rate of 12% per annum for delay in delivery of apartments, overruling the builder-buyer agreement that had set the rate at 1.8% per annum. While these recourses will not benefit you immediately, you may be able to recover some of the loss.

Under current conditions, project delay is the biggest risk for a home buyer. “ Given the companies’ stretched balance sheets and cashflow problems, we expect execution delays to persist in the short term,” said Samir Jasuja, founder and chief executive officer, PropEquity. If possible, avoid buying an under-construction property. It may be better to pay a premium to buy a completed apartment than being in a situation like that of Prakash and Pandey.Also, do proper due diligence about the developer, track record of delivery, quality of projects and financial position, if possible, before buying a property.

BGALURU: Rajini Chengappa, 58, and husband Vivek, 65, bought a flat in Kodigehalli, off Hebbal, in 2012. They moved into the sixth-floor flat a year later.

The builder, Vivek says, had promised them an occupancy certificate (OC), but it has remained a promise. The Chengappas are not alone in their plight. Thousands of homeowners are facing a similar quandary. Nearly 10,000 buildings in Bengaluru, including 50% of apartments built after the Karnataka government introduced transfer of development rights (TDR) in the city in 2005, do not have OCs, say official sources.

In many cases, though the building plans are approved, OCs are denied due to other violations. Obtaining an OC is a requirement under the Karnataka Apartment Ownership Act, 1972. The law says one cannot legally move into a building unless the developer gets an occupancy certificate from the BBMP or BDA. The corporation can ask apartment owners to leave such illegally occupied flats or impose heavy penalties.
Replying to a question at the recent Belagavi assembly session, chief minister Siddaramaiah had said only 97 highrises in Bengaluru have obtained OCs between 2009 and 2014, while promising stern action against builders violating construction norms.
Energy minister DK Shiva Kumar echoed similar views and directed officials to get tough with apartment builders, by disconnecting power.
But it’s not as easy as it seems, considering the quantum of violations, nexus between civic officials and builders and a lack of stringent laws. Many errant builders and developers have, over the years, gone scot-free, say those familiar with the working of the sector.There are several examples of builders disappearing without giving OCs and legal water connections to housing complexes. Apprehensive of losing their homes, buyers who’ve invested hard-earned money move into their flats and make do with water from pumps and water tankers.